Document for conducting electronic financial transactions

ABSTRACT

A commercial paper document is provided with all necessary information to be a legal negotiable instrument sufficient to complete a financial transaction via facsimile. The commercial paper document contains user input fields (including a payee name, a date and an amount) completed by a drawer or payer party. The commercial paper document further contains computer-readable code fields for information including a bank identification number and an account number which may be in a bar code format. Security of the transaction is ensured by placing an encrypted code field (such as a signature field) on the document. When the commercial paper document is sent to both the payee and the drawee and the payee presents the document for remittance, the drawee may verify the authenticity of the document using the encrypted code field.

This is a division of application Ser. No. 08/476,655 filed Jun. 7,1995, now U.S. Pat. No. 5,594,225, entitled Methods and Systems forConducting Financial Transactions via Facsimile.

This invention relates to financial transactions using facsimilemachines at the party sites and software operating on computers toprocess the financial paper. More particularly, it relates to generatingdraft documents and distributing copies thereof to the drawee and to thepayee or the payee's bank via digital facsimile.

BACKGROUND OF THE INVENTION

Conventional commercial paper transactions such as bank checkingaccounts are typically associated with high overhead costs for time andlabor. For example, check drafts generally require hand processingwherein the check is received by the drawer's bank (sometimes referredto hereinafter as "drawee") through conventional mail systems andinformation displayed on the check then manually entered into a computeror records database. Finally, the check must be physically retained forfuture record needs or be retained for return to the payor.

With the advance of computer and communications technology, theprocessing of commercial paper has aided in record keeping as well as areduction in the physical flow of actual cash. For example, improvedcomputer systems have evolved to the state where physical money need notbe used. Instead, "value exchange" is achieved through electronic fundstransfer. Typically, the evolving technologies are a true digital cashformat. For example, some digital cash systems implement a "cybercash"account. Cybercash accounts are typically manipulated or handled bysoftware operating on a computer with some user involvement. Suchaccounts aid in minimizing human error when processing accounts.Cybercash systems require a new operational transaction level inaddition to the current commercial paper system. For example, a standardcommercial paper system involves drafting a check by a payor to a payee.The payee then presents the check to his bank for payment. The payee'sbank presents the check to the drawer's bank for payment. Uponpresentment, funds are transferred from the payor's bank to the payee'sbank, typically through an automated clearinghouse (ACH) or the FederalReserve system.

A cybercash account system requires a drawer to establish a cybercashaccount in addition to his banking account. To use the cybercashaccount, the drawer is required to transfer funds from his conventionalchecking account into the cybercash account. Only then can the drawerwithdraw the cybercash and use it to make purchases over the internet (acomputer communications network having a purchasing or shoppingnetwork). Furthermore, to use such a system requires the user to have asound knowledge of computers and computer software and of theinternet--a skill or capacity not available to a large number of people.

Other variations on commercial paper systems merge computer technologywith the electronic funds transfer system. For example, U.S. Pat. No.4,960,981 (which relates generally to electronic funds transfer systems)shows a paper voucher which is customized and preprinted for anindividual account. Facsimile machines are used to transfer voucherimages in transactions between sellers and buyers.

Electronic financial transaction systems thus far generally require theinvolvement of a third party to generate the checks. That is, a drawermust order preprinted checks from a supplier for use in the financialtransactions. Furthermore, such systems do not generate legal draftswhich conform to the legal definition of commercial paper and,therefore, do not enjoy the status of "commercial paper." Such systemstypically require verbal confirmation and exchange of informationbetween the parties involved in the financial transaction, therebyincreasing the involvement, time and expense of the parties to thetransaction. Therefore, a commercial transaction system which wouldreduce the amount of physical paper generated; expedite the fundstransfer process; and be readily implemented and accepted in the presentcommercial paper system which can be readily understandable by thepublic at large is highly desired.

SUMMARY OF THE INVENTION

In accordance with the present invention, a commercial paper transactionsystem is provided which employs facsimile processes to replaceconventional commercial paper. A typical transaction system involves adrawer party or payor, a drawee party or payor's bank and a payee party.The system of the invention comprises a remote facsimile machine at thesite or sites of the payor and the payor's bank. Images of the draftdocument are sent by the remote facsimile machine at the payor site tothe facsimile machine at the payor's bank site. Computer equipment,programmed with appropriate software, electronically retrieves andprocesses the fields on the draft document for clearing the transactionafter the draft document is presented by the payee party for payment ofthe draft document.

The draft document incorporates written information necessary to qualifyfor the legal requirements of commercial paper. Further, writteninformation is converted in the document to computer-readable codereadable by a computer at the payor's bank site which has theappropriate software. The draft document further has necessaryinformation encrypted in computer-readable code for transportability ofthe document to payor's bank site using conventional processing systems.

The invention may take various forms and is suitable for use in a widevariety of assembly operations. Other features and advantages of theinvention will become more readily understood from the followingdescription taken in connection with the appended claims and attacheddrawing in which:

BRIEF DESCRIPTION OF THE DRAWING

FIG. 1 is a block diagram depicting a system for conducting a financialtransaction between a payor, a payor's bank and a payee in accordancewith the invention;

FIG. 2 is an illustration of a draft document as used in the system ofthe invention; and

FIGS. 3(a)-(c) are flow charts showing the transactional method of theinvention and the programming steps of respective computers at the payorand the payor's bank sites.

DESCRIPTION OF PREFERRED EMBODIMENT

An overview of the commercial paper transaction is represented generallyby the numeral 10 in FIG. 1. A payor or drawer 20 electronically createsa commercial paper document or draft document 40 using a personalcomputer controlled by draft generation software. A draft document 40(illustrated in FIG. 2) is a three-party commercial paper which is anorder by the payor 20 to a drawee 24 (typically a bank created undernational law or state law) demanding that the payor's bank 24 pay moneyto still a third person, typically known as the payee or the bearer 30(a payee is a bearer if the document is a pay-to-bearer draft). Once thedocument is created, the payor 20 uses a facsimile machine 22 to fax thecommercial paper document 40 to the payee 30 via a payee receivingfacsimile machine 32. Almost concurrently the commercial paper document40 is also transmitted to the payor's bank 24 via facsimile machine 26.The draft document 40 is then processed by the payor's bank 24 fornecessary information such as the drawer's account number 41, the checkamount 80 and the routing code 85 as shown in FIGS. 1 and 2.

An important aspect of the invention is the draft document showing inFIG. 2. The payor 20 electronically generates the draft document 40 withthe aid of a personal computer controlled by draft generating software.The payor 20 initializes the software by supplying his biographicalinformation. Such information is the payor's address field 48, the payorbank address field 50, the starting check number field 52 (which is asequential counter), the bank number field 87, the routing field 85, andpayor's account number field 91. The initialization procedure is thencomplete.

To generate a draft document 40, the payor 20 is prompted to completethe information required in the draft portion 58 of the draft document40. The payor 20 is also prompted to provide the date of the check forfield 60 and the payee field data 62. The payor's signature is digitallyscanned and stored as a digital bit map or another sufficient digitalformat for recall in the signature field 64. The payor's signature canbe manually signed by the payor 20 if the document 40 is printed in atangible form. The signature field 64 also permits visual verificationof the payor's draft document 40. Further fields can be added to thedraft document 40 such as a payee endorsement field and a payee accountnumber field. Each such field can be adapted to the user's needs andprovided by draft generating software operating on a personal computer.

A receipt portion 66 of the document 40 may be generated as desired. Asillustrated in FIG. 2 the software, operating on the computer, promptsthe payor 20 for an invoice number field 68 which mirrors the invoicesused by the payor 20 if it is a business concern, a description field 70to describe the nature of the payment, and a gross amount field 72. Thepayor 20 can then specify a deduction amount of the payment, if any,which is placed in field 74 in a percentage format as shown. If apercentage format is entered in the deduction field 74, the softwaregenerates the percentage amount in field 76. Otherwise, the deductionamount field 74 can be left blank and the payor can complete the amountfield 76 with a deduction value. The net amount field 78 is thencalculated by personal computer in conformance with instructions fromthe software. The value of the net amount field 78 is then copied to thedraft value field 80 of the draft portion 58 in both alphanumeric formatand numerical format as best shown in FIG. 2. The date field 82 of thedraft portion 66 is copied from the date field 60 of the receipt portion58.

Once the payor input is complete, the software translates the followingfields into a computer-readable code (such as standard bar code format)near the lower edge of the draft portion 58; the payee field 62 istranslated into payee field 84; the net amount field 78 is translatedinto amount field 86; date field 60 is translated into thecomputer-readable code date field 88; and the check number field 52 istranslated into field 90. The information for routing computer-readablecode field 85; payor's bank identification number computer-readable codefield 87; and payor account number computer-readable code field 91 isprovided by the payor 20 upon initialization of the draft generatingsoftware after loading the software on a computer. Othercomputer-readable code, optical, magnetic or otherwise, apart from barcoding may be used. For example, a DataGlyph format provided by XeroxCorporation can be used for the encryption method and placed in thesignature field 64 or other suitable location on the draft document.

Conventional commercial transaction information is preferably encoded inoptical code recognition (OCR) format. As shown in FIG. 2, the OCRdrawer account number is imprinted in field 96, the OCR bankidentification number is imprinted in field 94 and the OCR routinginformation number is imprinted in field 92. Using the combination ofthe conventional OCR and a computer-readable code format allowsconventional draft processing through the OCR format (alreadycommonplace in the conventional financial transaction systems) whilesimultaneously allowing expedited processing utilizing othercomputer-readable code formats such as bar coding.

Once the draft document 40 is generated, the payor 20 initiates paymentfrom his personal computer through a fax/modem or by printing a hardcopy of the draft 40 and then sending the hard copy via facsimilemachine 22. The payor 20 can fax the check to both the payee 30 and thepayor's bank 24 with either form of technology. It should be noted thatuse of fax/modem retains the drafts in an electronic form, thus reducingneed for paper. For taking advantage of the draft document code fields,the payor's bank 24 must have implemented the computer-readable codedeciphering equipment with accompanying software for rapid processing ofthe check document information.

The draft document 40 as shown in FIG. 1 is transmitted through the useof facsimile transmission technology. Facsimile machines 22, 26, 32 and98 are conventional digital machines capable of CCITT, group III orgreater image transmission. Such facsimile machines are not described indetail herein. Conventionally, a facsimile machine contains all thenecessary electronic capability to function as a "front-end" processorfor further processing by personal computers. That is, the facsimilemachine acts as a digital scanner, converting standard text into amachine readable format. Fax, as used, indicates either of two processescurrently available. For example, the payor 20 can fax the draftdocument 40 without reducing it to physical form via a fax/modem whichhas the capability of taking the electronic file format provided by thecheck generation software and translating the document into amachine-readable format such as a bit map. Other sufficientmachine-readable formats can be implemented according to the algorithmsused by the translational device. Otherwise, the draft document 40 isreduced to a hard copy print-out. The hard copy print-out is then fedinto a facsimile machine which acts as a document reader with an opticalscanner which translates the print-out into a digitized image formatsuitable for transmission to other facsimile machines. The digitizedformat is generally a bit map format. Character recognition equipment inthe receiving facsimile machines 24, 32 or 98 utilize a computationalalgorithm to recognize and reconstruct the textual content of thedigitized image to data transmitted over standard telephone transmissionlines.

To operate the system of the invention the payor 20 initially completesthe draft document 40 as shown in FIG. 2 and as described above. Thepayor 20 then enters the telephone number of the payee into hisfacsimile machine 22. The document 40, now completed, is inserted intothe facsimile machine 22 (or on a virtual piece of paper such as in acomputer word processor program through a fax/modem) and the payor 20initiates the facsimile transmission. The facsimile machine 22 of thepayor 20 goes on-line with the facsimile machine 32 of the payee 30. Thedraft document 40 is electronically transmitted to the payee 30 viafacsimile machine 32. The check document 40 is electronicallytransmitted to the payee via facsimile machine 32 as shown in FIG. 3(a)by step 99. The draft document can be received either as a hard copyprint-out or remain in electronic form, depending upon the computerequipment configuration as set by the payee 30 as shown by step 100. Atstep 102 the draft document 40 is presented to the payee bank 40 forpayment. At step 102 the check can either be in machine-readable formator in hard copy format. If in hard copy format, the payee 30 can removethe receipt portion 66 of the draft document 40 to retain for hisrecords. If the payee bank 100 has the capacity to process the draftdocument 40 (step 104) in electronic form, then payee 30 presents thedraft document 40 to the payee bank 100 via facsimile machine 98 (step106). If the payee bank 100 does not have the capacity to process thedraft document 40 in electronic form, then the payee 30 presents thedraft document 40 in a hard copy form (step 108). In either form, thepayee bank 100 can process the draft document 40 using conventionalcomputer code deciphering equipment such as OCR or bar code scanningequipment (step 110). After processing the draft document 40, the payeebank 100 presents the check to the payor's bank 24 for payment (step112).

As illustrated in FIG. 3(b), the draft document 40 is transmitted fromthe payor's facsimile machine 22 to the payor's bank 24 via facsimilemachine 26 (step 120). The payor's bank 24 has the necessary equipmentutilizing the appropriate processing algorithms to process the draftdocument 40. That is, upon a bit map input the payor bank computerformats the digitized facsimile image of the draft document 40 into aprotocol which is compatible with that of the software (step 122). Aprogram executed at or by the payor's bank computer processes theformatted draft document 40 (step 124) by analyzing and extracting thecomputer-readable code fields 84, 85, 87, 91, 86, 88 and 90 (see FIG.2). The payor's bank computer verifies that the payor account numberprovided in computer-readable code field 86 is valid (step 126) and thatthe credit/debit balance of the payor's account is sufficient to coverthe amount designated in the amount field 80 (step 130). If the accountnumber is invalid or there are insufficient funds, the draft document40, upon presentment for payment, will be denied (step 128). Theprocessed data is stored in a database within the computer programmemory (step 132). The payor's bank 24 then awaits for a request forpayment against the draft document 40 (step 134).

As illustrated in FIG. 3(c) the draft document 40 is presented forpayment to the payor's bank 24 (step 130). The draft document 40 isprocessed for computer-readable code fields 84, 85, 87, 91, 86, 88 and90 shown in FIG. 2 (step 142). This is done either by stand-alonescanning equipment having an algorithm for scanning thecomputer-readable code information or by reducing the draft document toa bit map format through use of a scanner device. After processing (step142), the computer-readable code information is stored in computermemory (step 144). The information from the received draft document 40from the payee bank 100 is then compared with the information from thedraft document 40 transmitted by the payor 20 (step 146). If theinformation is identical or equal (step 148), the commercial transactionis completed by debiting the payor's account the value of the check(step 150). The amount is transferred to the payee bank 100 (step 152)through the Federal Reserve 80 (see FIG. 1) for credit in the payee'saccount. If the information is not identical or equal, then no funds aretransferred (step 128, FIG. 3(b)).

By transmitting draft documents 40 via facsimile, the use of paper isreduced, thereby resulting in savings of natural resources. Furthermore,the transaction takes substantially less time for a transfer to occur.

Although the invention has been described with particular reference tospecial apparatus and methods of electrically generating, transmittingand processing draft documents, it is to be understood that the forms ofthe invention shown and described in detail are to be taken asillustrative of the principles thereof only and that various changes,modifications and rearrangements may be resorted to without departingfrom the spirit and scope of the invention as defined by the appendedclaims.

What is claimed:
 1. A commercial paper document for conducting a financial transaction having a drawer party, a drawee party and a payee party comprising:a) user input fields for all written information necessary to qualify as a negotiable instrument adapted for completion by the drawer party to create a commercial paper document; b) computer-readable code fields for all information necessary to process the negotiable instrument by the drawee party; and c) an encrypted code field, whereby an image of the commercial paper document with the encrypted code field may be transmitted to the payee party and the drawee party so that when the payee party presents its image of the commercial paper document to the drawee party, the drawee party may use the encrypted code field to verify the authenticity of the payee's image of the commercial paper.
 2. A commercial paper document as defined in claim 1 wherein the user input fields include a payee name, a date and an amount which are in optical code recognition format.
 3. A commercial paper document as defined in claim 1 wherein the computer-readable code fields include a bank identification number and an account number which are in bar code format.
 4. A commercial paper document as defined in claim 1 further comprising a receipt portion.
 5. A commercial paper document as defined in claim 4 wherein said receipt portion comprises:(a) an invoice field for tracking drawer billables; (b) a description field for describing the nature of the payment; (c) a gross amount field; and (d) a deduction field.
 6. A commercial paper document as defined in claim 1 wherein the encrypted code field is the signature field. 